The postings of a customs lawyer in Chicago on the state of customs law and international trade law. Important Disclaimer: None of this is legal advice, don't act on it. Don't ascribe these statements to my law firm, its partners or clients. Don't steal from my blog. I wrote it, I own it. But, feel free to link to me. Also, under the rules regulating speech by attorneys, this blog may be construed as lawyer advertising. I am the sole party responsible for the content.

Thursday, January 29, 2009

As with most things in administrative law, it is all about Chevron. The upshot of this case is that Commerce's interpretation that the contract for the enrichment of uranium and the return of low enriched uranium falls within the ambit of the antidumping laws is permissible.

Darned deference to the agency. It always gets in the way of a good argument.

It seems the Obama Administration is about to walk into its first test on trade policy. The House-passed stimulus package includes a provision requiring that certain materials (including steel) used in stimulus-funded infrastructure programs come from the US. This is an expansion of existing rules under the Buy American Act. Specifically, Section 1110 says:

USE OF AMERICAN IRON AND STEEL. 7 (a) IN GENERAL.—None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron and steel used in the project is produced in the United.

The Senate plan apparently has even tougher rules that require the equipment used on the projects be American.

While this strikes some as a simple measure intended to ensure that stimulus money stay in the US, others are concerned that it is a step toward protectionism. Further, it likely violates our commitments under the WTO agreement on government procurement and the procurement provisions of several free trade agreements.

Tuesday, January 27, 2009

Brokers know that they are required to file a report with Customs and Border Protection stating that they are continuing to work as a broker and their address. That's in the customs regulations at sec. 111.30(d). They also have to pay the applicable $100 fee. The report is due February 1, so if you are a broker, get your ducks in a row and do your filing.

If you don't, you may be in trouble. I know this because the Court of Appeals for the Federal Circuit has recently decided Schick v. United States. Mr. Schick lost his license because of a failure to file his triennial report. He then appealed to the U.S. Court of International Trade, which held that it had jurisdiction to here his appeal. On that narrow point, the Federal Circuit reversed. According to the Court of Appeals, the revocation of a license for failing to file the report is not reviewable by the Court of International Trade because it is not an action that is specified in 28 U.S.C. sec. 1581(a)-(h). Most specifically, this revocation is not a disciplinary proceeding under sec. 1641(d), which would be reviewable in the CIT.

So what is Mr. Schick to do? Well, the CAFC dangles the possibility of review by another court. But where would he go and what would he do there? The Administrative Procedure Act says that a person aggrieved by an action of a federal agency is entitled to review of that action. The problem is that the APA does not establish jurisdiction for a court to hear the claim. If this claim does not belong in the CIT, it would appear to be best addressed by the district court in the port where Mr. Schick should have filed his report.

Good luck to Mr. Schick. I'm sorry to say that even if he finds a court with jurisdiction, the facts are going to be tough to overcome without some very compelling law.

Monday, January 26, 2009

Sources within U.S. Customs and Border Protection (CBP) have confirmed that late Friday a decision was made by the Office of Management and Budget (OMB) and Department of Homeland Security (DHS) not to delay the implementation date for the 10+2 rule.

Friday, January 23, 2009

The Obama Administration has halted the implementation of all pending regulatory changes until they are reviewed. This throws lots of Customs and Border Protection activity into limbo. For now, the Importer Security Filing (AKA 10 + 2), aspects of the Lacey Act, the country of origin rules, etc. are on hold.

I suspect that these things will move forward unless there is a coordinated outpouring of opposition from the trade. In the big picture, I think these issues are not likely to strike the new administration with the same force as, for example, putting a drilling rig on every beach from Maine to Florida.

But, all we can do is wait and see.

Another thing to watch will be action or inaction on trade agreements. Columbia, Korea, and others have been stalled. The Obabma people have not been kind to FTAs until this point. So, we wait on that as well.

Wednesday, January 21, 2009

Here is a press release from the Office of the United States Trade Representative regrading the February 1 implementation of the Peru FTA. Expect an immediate uptick in the importation of llamas.

In more Peru news, portions of the Nazca lines have been damaged by rainfall. This, of course, presents serious problems for aliens returning to earth who use lines for navigation and landing. It must be true, I read that here.

Customs and Border Protection has published a 2008 year in review of its Customs-Trade Partnership Against Terrorism program. Here are some interesting 2008 statistics:

Certified 1,448 new members

Validated 3,469 supply chains

Added 50 supply chain specialists

Suspended 121 members

Removed 118 members

Completed 52 appeals (26 denied, 18 approved, 8 reduced suspensions

For those of you who may not know, C-TPAT is a voluntary program under which members agree to undertake reasonable steps to secure their supply chain from container stuffing to delivery to the ultimate consignee. The program requires considerations of physical security to the merchandise, plant location security, network access security, and personnel policies including background checks at hiring and appropriate measures when an employee leaves.

The benefits of membership include fewer intensive examinations at the time of entry and the possible participation in the Importer Self Assessment program.

And, as they say, that's it in a nutshell. If this is new to you, visit here.

Monday, January 19, 2009

I went into the office today despite our being officially closed for MLK, Jr. Day. I feel like I need to catch up a bit as I will be out Thursday through Monday for various work and non-work events.

While sitting at my desk working on a paper about res judicata and stare decisis, I heard an unfamiliar rumbling noise. Looking out the window, I saw a City of Chicago fire boat breaking ice on the Chicago River. Thinking it was cool, I snapped the following pictures. Hopefully, WAYLA-guy will forgive the intrusion onto his blog beat.

Thursday, January 15, 2009

This is great news for spammers. Now you'll be able to trust those internet "pharmacies" promising to deliver your important (and recreational) medicines to your door. It's probably also good news for lots of people who have a hard time paying for their medications.

Some how or another, Customs and Border Protection has developed a test to determine the country of origin of shrimp. The shrimp were declared to be from Indonesia but tested as Chinese. According to the article, the test results led to a 112% antidumping duty being applied.

How exactly does one accidentally cross a bridge that is heavily guarded at 2:00 pm and end up in the middle of El Paso by accident? Oh, they were looking for help clearing some vendors off the bridge. That makes sense. How do you say GPS in Spanish?

Wednesday, January 14, 2009

Lately, I have been thinking a lot about stare decisis. [Hence the title.] Those of you who saw my panel at the Court of International Trade Judicial Conference probably know why. It turns out that I will be discussing much the same territory at the 2009 International Trade Update at Georgetown Law (March 5-6).

I was, therefore, interested to see Outer Circle Products v. U.S., from the CIT. The case involves the classification of zipper wraps for bottle and jugs of various sizes. You've likely seen these at picnics or tailgate parties. They sound similar to the foam or foam and fabric jackets you can wrap around a beer bottle to keep it cool and your hands warm and dry. Customs and Border Protection classified the merchandise in heading 4202, the provision covering trunks, suitcases, bottle cases, etc. and similar containers. The specific provision used at liquidation carried a 10.3% rate of duty. The importer argued for classification as tableware, kitchenware, and other household articles of plastic in Harmonized Tariff Schedule heading 3924.

One of plaintiff's primary arguments was that this issue had been effectively decided by earlier decisions that should control. Those cases involved merchandise designed transport beverages. In both cases, the merchandise was held to be classifiable in 3924.

The problem for OCP is that the bottle wraps are not, as imported, capable of transporting beverages. If these look anything like the ones I have seen, they have openings at the bottom and, of course, a zipper. That means, in their condition as imported, they do not function as beverage holders (at least that is what the Court held).

But, my interest is in the stare decisis argument. For family members reading along, stare decisis is the principal that cases should be decided consistent with prior decisions of the same court or a superior court in the same jurisdiction. This makes for predictability and uniformity in treatment and is considered to be a good thing (except in most of the rest of the world). Stare decisis gives way where the judge finds the prior case was erroneous or something has changed in the facts or law (we call that distinguishing the cases).

In its decision, the Court of International Trade said the following:

Because the doctrine of stare decisis applies only to legal issues and not issues of fact, this Court is burdened by the previous holding in SGI only to the extent that such issues apply. The determination of whether the merchandise at issue comes within the description of either HTSUS Heading 3924 or 4202, however, is a question of fact. Therefore, the classification of soft-sided cooler bags in SGI is not stare decisis to the classification of the subject imports in this case.

Thus, we have an object lesson in the impact of the two-step process of tariff classification. Step one: determine the meaning of the tariff term. That is a question of law. Stare decisis applies. Step two: determine whether the thing falls within the scope of the tariff term as construed in step one. That is a question a fact. Stare decisis does not apply.

If stare decisis does not apply, what prevents me from relitigating this issue on every subsequent entry of the same merchandise. Normally, a lawyer's answer to that would be res judicata in both its claim preclusion and issue preclusion modes. But, the answer is not so easy in customs law. That is because of a Supreme Court case called United States v. Stone & Downer, 274 U.S. 225 (1927). That case let stand a rule that res judicata does not apply in classification cases.

In preparation for Georgetown, I am trying to wrap my head more firmly around Stone & Downer. I'm pretty sure I know where I am headed on this, but I still have work to do (or have done). So for now, all I have is that stare decisis applies, res judicata does not, but it seems clear that neither importers nor the U.S. Department of Justice is free to take repeated thwacks at the classification pinata. More to follow.

Have I mentioned that I love my Zune? Last time I discussed it, I was upset about having lost mine. I subsequently replaced it and went with the 120 GB version.

The hardware is cool and works just like it should. Not really that different than an iPod once you get the hang of the touch pad.

What I really like is the software, especially since the upgrade to the new version. I have iTunes in my house. I know this might start a flame war (at least it would if I had a significant number of readers), but the Zune software interface is head and shoulders easier to manage than iTune. I am always having to fiddle with iTunes to manage podcasts manually. With my Zune, I plug it in and everything happens just they way I expect it to.

Thus, I was a little concerned when I read this morning reports that the Zune was on its way to the grave. Happily, I also read that Microsoft is committed to the product. Let's hope its true.

Friday, January 09, 2009

One side effect of Costa Rica finally implementing the Central American Free Trade Agreement is that the clock has started to run on certain retroactive claims for duty-free treatment.

As implemented in 19 CFR 10.699, the Agreement permits retroactive application of the duty preferences and, therefore, refunds of excess duties paid on goods that qualify. There are lots of requirements for this work:

The merchandise must be a textile or apparel good entered on or after January 1, 2004 and before January 1, 2009 (the implementation date for Costa Rica).

The good qualifies as originating

Duties in excess of the preferential rate were paid

The request for a refund must be made to the port of entry within 90 days. So . . . go look at those Central American entries and see if there is anything on which you paid duty that might be the subject of a refund. The refund request has to contain information confirming the originating status of the merchandise. That means you will likely need certification or backup from your supplier.

Thursday, January 08, 2009

Right now, I am grading papers for my John Marshall Class on NAFTA and other US Free Trade Agreements. A theme running through a few is whether NAFTA is constitutional. The most common argument against constitutionality is that NAFTA is a treaty. The Constitution requires treaties to be negotiated by the President and ratified by the Senate by a 2/3 vote.

NAFTA, on the other hand, is the product of the fast track process. Under fast track, the President (of his proxies) negotiate the deal and bring it to Congress. Congress then considers the deal in the form of standard legislation and votes on it in both houses. If it passes by a simple majority, it becomes the law. New law, no treaty necessary.

Some have argued that this process, and similar congressional-executive agreements, are unconstitutional in that they are an end run around the Treaties Clause. In reality, they are a reasonable delegation of congressional authority to the President. Congress, we must remember, has constitutional authority to regulate trade between the U.S. and foreign nations (as well as Native American tribes). Of course, 535 members of congress can't very well sit down with the President of Morocco (or all of Morocco's legislators) and hash out a trade agreements. So, to facilitate trade deals, Congress has granted fast-track authority to the President. So, most scholars (but not all of my student) have found the process to be constitutional.

All of this is context for this editorial from the New York Times in which former U.S. Ambassador John Bolton and former Deputy Attorney General John Yoo bemoan the use of congressional-executive agreements in lieu of Senate ratified treaties. The examples they raise are much more dire than "simple" FTAs, but I am not sure their analysis is particularly more compelling than my one paragraph above.

Sunday, January 04, 2009

A federal judge in Brooklyn has rejected a Liberian woman's religious reasons for smuggling endangered monkey meat into the country.

U.S. District Judge Raymond J. Dearie ruled Wednesday that Mamie Manneh's faith didn't preclude her from applying for permits to import exotic food or explain why she misled officials.Manneh was charged with smuggling the meat three years ago after customs agents seized a shipment of primate parts as it passed through Kennedy Airport on the way to her home in Staten Island.

Friday, January 02, 2009

I am back from a brief vacation and clearing my virtual and physical desktops before I have to go to Washington on Monday.

Thus, I pass along this notice from the United States International Trace Commission announcing the formal commencement of its study of customs valuation using the "first sale methodology." According to the notice, the period of the review will be entries from September 2008 to August 2009. The ITC is accepting comments through April 30, 2009.

Welcome to the table as of January 1, 2009. We are very happy to welcome you to full participation in the CAFTA-DR. On behalf of no one, let me extend my best wishes for a long and prosperous relationship.